Cryptocurrency project Tezos to launch main network next week: document

NEW YORK/ZURICH (Reuters) – The Tezos cryptocurrency project is preparing to launch the long-awaited main version of its network that underpins a new virtual token on Monday, according to a message seen by Reuters from Ryan Jesperson, the president of a Swiss foundation that promotes the initiative.

The Tezos Foundation raised $232 million in July 2017 to build the network and issue a new type of cryptocurrency to its backers in one of the largest-ever initial coin offerings, and launched an initial version of the network one year later after months of delays.

The Tezos Foundation plans to transition the network to a mainnet, or a more complete version, on Monday, according to Jesperson’s message. A foundation representative did not provide comment in time for publication.

That launch would mark an achievement in a project hobbled by internal infighting and delays. Tezos still faces litigation in the United States and the threat of increased regulatory scrutiny of the nascent cryptocurrency sector.

A high-profile feud between project founders Arthur and Kathleen Breitman and former foundation president Johann Gevers was followed by Gevers stepping down in February. He was replaced by Jesperson, one of the project’s contributors.

Since Tezos’s problems were first detailed by Reuters in October, several class-action lawsuits have been filed in the United States against the project’s organizers alleging the fundraiser violated federal securities laws and defrauded investors.

In February, the U.S. Securities and Exchange Commission denied a public information request from David Silver, a lawyer representing some of the class-action plaintiffs, seeking information on Tezos, saying doing so could interfere with an investigation or enforcement activities.

The Tezos fundraiser was structured as a donation, though some contributors say they believed it was an investment. If deemed a securities offering, the new cryptocurrency might fall under the remit of the SEC.

The Reuters investigation published in October also found that Arthur Breitman, a French citizen registered with the Financial Industry Regulatory Authority (FINRA) in the United States, had not reported any outside business activity while working at Morgan Stanley in 2014 and 2015 when he was developing and pitching Tezos.

In April, FINRA suspended Breitman from associating with broker-dealers for two years, part of a settlement to resolve allegations that he made false statements about his side venture while working at Morgan Stanley.